Starting a limited liability corporation (LLC) is a huge step for a business, but what happens after that is as crucial.
You will want to ensure that your new business is appropriately set up to be financially successful, that it complies with all applicable regulations, and that your personal assets are protected.
To assist with this, we’ve compiled a list of nine essential steps to undertake after incorporating an LLC.
It may seem to be a large list, but the majority of the tasks are pretty straightforward, and we’ll supply you with the knowledge and tools you need to complete them.
Steps to Take Following the Formation of an LLC
Creating an LLC is just the first step. There are still things you need to do once your new company is established and official before you start for business. These are some examples:
Make a business agreement.
Obtain an Employer Identification Number (EIN) (EIN)
Open commercial bank accounts and credit cards.
Hire an accountant.
Find out more about LLC taxes.
Investigate and apply for commercial licences and permissions.
Create an online presence.
Make a press release.
Following the formation of your LLC, you should do the following to ensure that you comply with all applicable local, state, and federal rules, maintain your liability protection, keep correct financial records, and attract consumers to your firm.
1. Establish an Operating Agreement
An operating agreement is a legal contract that defines an LLC’s ownership and member responsibilities.
An operating agreement is required by law in a few states (California, Delaware, Maine, Missouri, Nebraska, and New York), although it is optional in the majority of states. Even though it isn’t required in your jurisdiction, we suggest getting one for a few reasons.
To begin, an operating agreement may assist to avoid or settle disagreements amongst LLC owners by setting out guidelines on how to handle certain circumstances that your firm will or may experience. Furthermore, if your firm is a single-member LLC, an operating agreement may provide legitimacy to the corporation while also ensuring that courts respect the company’s limited liability status. If you don’t have an operating agreement in many states, your LLC may be subject to default restrictions governing some company activities.
Operating agreements typically include at least six major sections:
Voting and Management
Contributions in Kind
Changes in Membership
You are free to include any extra parts that pertain to your company. You may build the contract in an easy-to-use question-and-answer style using our free LLC operating agreement generator. If you like, you may use our free operating agreement template. If you don’t want to write it yourself, you may hire an attorney to help you.
2. Obtain an EIN
An EIN functions similarly to a Social Security number (SSN) for your LLC. It is also known as a Federal Employer Identification Number (FEIN) or a Federal Tax Identification Number (FTIN) (FTIN).
If any of the following apply to your company, you must obtain an EIN:
Your company employs people.
Your LLC has several members.
Your LLC is required to submit excise taxes.
Nonwage income paid to a nonresident alien is taxed by your LLC.
Getting an EIN is an excellent idea even if you operate a single-member LLC with no workers. Most banks need your LLC to have one in order to establish a business bank account, which is an important aspect of preserving your limited liability protection.
More reasons why your LLC should obtain an EIN may be found in our 7 Benefits of Obtaining an EIN article.
3. Establish a Business Bank Account and a Credit Card
One of the most significant benefits of an LLC is the personal liability protection it provides. If the company is sued or goes bankrupt, the owner’s personal assets are not jeopardised.
This protection, known as the corporate veil, is not total, and it may be revoked in certain instances. Mixing your personal and corporate bank accounts is the simplest method to eliminate personal liability protection. Purchasing company supplies, taking payments, and paying bills using your own personal bank account or credit card are all examples of this.
As a result, before you begin operations, you must create a business bank account and get a company credit card.
4. Engage an Accountant
Many small company owners believe they can handle their own accounting and choose not to pay for a professional service. Hiring professional accountant, on the other hand, may save you money, worry, and perhaps legal issues in the long run.
The following are some of the benefits of employing an accountant for an LLC:
Prevents the company from overpaying taxes and assists it in avoiding penalties, fines, and other expensive tax blunders.
It simplifies accounting and payroll, giving you more time to concentrate on your expanding company.
Manages your company’s finances more efficiently, identifying areas of unanticipated loss or profit
5. Find Out More About LLC Taxes
Owning an LLC entails the need to pay taxes. However, before you begin paying, you must choose your LLC’s tax status and register with the appropriate government authorities.
Select Your LLC’s Tax Status
One of the benefits of an LLC is that owners have control over how the business is taxed.
Based on the number of owners, an LLC is automatically categorised as either a disregarded company or a partnership (members). The IRS considers a single-member LLC to be a disregarded entity, and a multi-member LLC to be a partnership.
An LLC, on the other hand, has the choice of being taxed as a S company (S corp) or as a C corporation (C corp).
The ideal tax structure is determined primarily by the amount of profit made by the firm and the owner’s financial intentions and goals for the company.
Register to Pay Taxes
Tax regulations differ depending on the state and the tax status of an LLC. It is a good idea to check with your state’s tax office to see which taxes you must register for and pay.
The following are some of the most typical forms of state taxes that an LLC may be required to pay:
The franchise tax
The sales tax
The employment tax
The withholding tax
Unemployment Insurance Contribution
Depending on its tax status, an LLC may or may not be required to pay corporate federal taxes. In any case, you do not need to register for federal taxes ahead of time (apart from maybe obtaining an EIN). That being said, whether your LLC is taxed as a C corporation that pays federal income tax or as a pass-through organisation where only the owner pays personal income tax, you should understand how to file your LLC taxes and the variations between each tax classification.
6. Investigate and apply for business licences and permits
One of the most crucial things to accomplish after creating an LLC is to get the necessary company licences and permits.
This might be a daunting process since company licencing and permit requirements vary greatly from state to state, and even across counties and towns. Different sorts of enterprises may need different types of licences.
Federal, state, and local licencing authorities are the three primary licencing jurisdictions.
Federal Commercial Licensing
A federal licence is not required for all enterprises. Only a few industries are governed by the federal government. These are some examples:
Ammunition, firearms, and explosives
Wildlife and fish
Fisheries for profit
Transportation via sea
Drilling and mining
Broadcasting on radio and television
Logistics and transportation.
Business Licensing in the State
State business licences and permits differ each state, but the seller’s permit, which enables enterprises to sell items and/or services in the state, is the most frequent. In certain states, this is referred to as a “sales tax permit” or a “vendor licence.”
Aside from the seller’s permit, there are a variety of state business licences and permits available, including:
Licenses for general business
DBA (doing business as) licences
Permits for zoning and building
Allowances for health
Licenses for food service
Licenses for alcoholic beverages
Licenses to practise medicine
Licenses for Fundraising
Licenses to sell real estate
Check out our How to Acquire a Business License state guides to find out which business licences you need in your state and how to get them.
Local Business Permits
Certain companies (or, in some cases, all enterprises) are required by certain towns and counties to obtain local business licences or permits. If you have physical sites in more than one city or county, you may need to get separate licences for each location.
The following are some examples of frequent forms of municipal business licences:
Licenses for general business
Permits for zoning and building
Allowances for health
Permits for the seller
Our state business licencing guidelines also give extra information on local business licences your LLC may require.
7. Purchase Business Insurance
Every limited liability company (LLC) should have some sort (or types) of business insurance.
At a minimum, your LLC should definitely have general liability insurance, which is a wide insurance coverage that protects your firm against litigation. Other insurance coverage that an LLC may need depend on the sort of company, whether or not you have workers, and other criteria.
Common forms of business insurance, in addition to general liability insurance, include:
Insurance for workers’ compensation
Insurance for professional liability
Insurance for commercial property
Insurance for commercial vehicles
There are numerous additional sorts of business insurance plans, and some are created expressly for certain types of enterprises.
Before you decide on which business insurance to buy for your LLC, check out our evaluation of the 7 Best Small Business Insurance Companies.
8. Establish your online presence
Every firm should have an online presence. Having:
Social media profiles
A YouTube channel
Make a Website
The design of your website may vary widely based on the kind of your company as well as your personal tastes. However, there are a few components that most company websites should have:
Page of Contact
Terms and conditions page
However, you have a lot of leeway in how you display the information on your website. The main thing is for prospective clients to be able to locate you on the web.
Create Social Media Accounts YouTube Presence
In addition to a website, you’ll want to consider developing company profile pages on prominent social networking sites like Facebook, LinkedIn, Twitter, and Instagram.
Twitter and Instagram may or may not be a suitable match for your company, but having a presence on Facebook and LinkedIn may help many prospective consumers (and perhaps even future workers) locate your firm.
Make a YouTube Account
A company YouTube channel may be used to:
Improve your SEO by raising your Google ranking and conversion rate.
Drive social media engagement and develop better ties with your consumers.
Provide extensive descriptions regarding goods and services.
Recommended: Make sure your business logo is prominently displayed on your website, social media accounts, and YouTube channel.
If you need assistance generating a logo for your company, check out our free logo generator.
9. Issue a Press Release
One quick and affordable strategy to market your new company is by publishing a press release. A press release is an official statement by a corporation that is provided to the press for public information. Press releases are often brief and to-the-point.
Issuing a press release offers a variety of possible advantages, including:
Helping to brand your firm.
Increasing foot traffic to your company.
Increasing your website’s search engine optimization (SEO) and boosting your business’s online exposure.